End-of-Life Domestic Refrigeration and Air Conditioning Equipment in Australia

End-of-Life Domestic Refrigeration and Air Conditioning Equipment in Australia

Department of the Environment 23 July 2014

ADVISORY

climate change and SUSTAINABILITY services

Contents

1.1Background on the Project 16

1.2Overview of domestic RAC equipment 18

1.3Domestic RAC equipment as waste in Australia 18

1.4Engagement overview 20

1.5Report outline 22

2Domestic context 23

2.1Federal Government policy framework 23

2.2State Government and Territories policy framework 27

2.3Equipment wholesalers 33

2.4Retail outlets 35

2.5Service technicians 39

2.6Households 40

2.7Local Government Authorities 41

2.8Refrigerant gas collectors 45

2.9Metal recyclers 48

3Disposal pathways and quantities 53

3.1Refrigerators and freezers 54

3.2Air conditioners 59

4Material composition 67

4.1Shredded metal 67

4.2Refrigerant gas 68

4.3Shredder floc 69

4.4Other end-of-life materials 72

4.5Material weight at end-of-life for refrigerators 77

4.6Material weight at end-of-life for air conditioners 81

5Recycling industry dynamics, opportunities and constraints 84

5.1Australian industry 84

5.2International practices 88

References 96

Appendix A – Stakeholder Engagement 100

Appendix B – Methodology for quantitative analysis 104

Appendix C – Data tables 112

Appendix D – Estimated refrigerant gas data for 2014 calendar year 118

Inherent Limitations

This report has been prepared as outlined in the Background, Engagement overview Section of the Report. The services provided in connection with this engagement comprise an advisory engagement, which is not subject to assurance or other standards issued by the Australian Auditing and Assurance Standards Board and, consequently no opinions or conclusions intended to convey assurance have been expressed.

The findings in this report are based on a qualitative study and the reported results reflect a perception of the domestic refrigeration and air conditioning (RAC) industry in Australia but only to the extent of the sample surveyed, being the references tabled and discussions with industry stakeholders. Any projection to the wider RAC industry is subject to the level of bias in the method of sample selection.

No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by, industry stakeholders in the RAC industry consulted as part of the process.

KPMG have indicated within this report the sources of the information provided. We have not sought to independently verify those sources unless otherwise noted within the report.

KPMG is under no obligation in any circumstance to update this report, in either oral or written form, for events occurring after the report has been issued in final form.

The findings in this report have been formed on the above basis.

Third Party Reliance

This report is solely for the purpose set out in the Background Section and for the information of the Department of the Environment and is not to be used for any other purpose or distributed to any other party without KPMG’s prior written consent.

This report has been prepared at the request of the Department of the Environment, in accordance with the Service Order SON458758 which was signed on 4 February 2014. Other than our responsibility to Department of the Environment, neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this report. Any reliance placed is that party’s sole responsibility.

Electronic Distribution of Reports

This KPMG report was produced solely for the use and benefit of the Department of the Environment and cannot be relied on or distributed, in whole or in part, in any format by any other party. The report is dated 23 July 2014 and KPMG accepts no liability for and has not undertaken work in respect of any event subsequent to that date which may affect the report.

Any redistribution of this report requires the prior written approval of KPMG and in any event is to be complete and unaltered version of the report and accompanied only by such other materials as KPMG may agree.

Responsibility for the security of any electronic distribution of this report remains the responsibility of Department of the Environment and KPMG accepts no liability if the report is or has been altered in any way by any person.

Executive summary

A study was carried out to map the disposal of domestic refrigeration and air conditioning (‘RAC’) equipment at end-of-life in Australia. The purpose of the study was to understand the disposal pathways, key stakeholders, and the influencing factors such as legislation, costs, and technology.

There appears to be a high rate of recovery of RAC equipment for metals recycling, and a high rate of recovery of refrigerant gases from air conditioners, but a low rate of recovery of refrigerant gases from domestic refrigerators and freezers at end-of-life.

Domestic Context

The main factors affecting disposal pathways and stakeholder behaviour are:

• 
  Federal Government policy initiatives in the areas of waste, ozone depleting substances, and synthetic greenhouse gases
  
• 
  State Government initiatives such as the New South Wales “Fridge Buyback Scheme”
  
• 
  Local Government practices and initiatives around landfill diversion as well as collection and disposal of RAC equipment
  

• 
  Financial factors including scrap metal prices in world markets (which are promoting a high rate of recovery of RAC equipment), supply chain costs, and waste disposal levies.
  

The major stakeholders identified in the RAC disposal chain are:

• 
  Retailers who “take back” refrigerators and freezers as a sales “add on” service
  
• 
  Local Government Authorities (LGAs), who are responsible for hard rubbish collection including degassing and disposal of refrigerators and freezers
  
• 
  Servicing personnel who remove air conditioning units as part of a new installation
  

• 
  Metal recyclers (shredders) who separate RAC equipment into metals and plastic.
  

Disposal Pathways and Quantities

The main controlled disposal pathways for refrigerators and freezers are:

• 
  Via kerbside collection by LGAs (or their contractors), “drop off” and consolidation at waste transfer stations or landfills, and transfer to metal recyclers for shredding
  
• 
  Via “take back” schemes operated by retailers who degas the equipment before sending it to metal recyclers for shredding.
  

A significant contribution to the refrigerator disposal chain is the activities of “scavenger” parties who collect from the kerbside and from other points in the disposal chain and sell directly to recyclers. This uncontrolled disposal is a significant source of non-compliance to the regulations around collection and disposal of refrigerant gases. Other sources of refrigerant gas loss are from LGAs where they are not degassing, metal recyclers where they do not check RAC equipment for refrigerant gas prior to shredding, and from damage to RAC equipment in the disposal chain.

By comparison, the disposal pathway for air conditioners is more highly regulated compared to that for refrigerators. A licensed service technician is generally involved in installation and will collect and consolidate the recovered refrigerant from the obsolete unit.

RAC sales experienced a high rate of growth between 2000 and 2006. This was due to the popularity of two-door fridge and freezer units, and of split system air conditioners. This is predicted to lead to an increase in the annual disposal rates from 800.000 to 1.2 million units (refrigerators and freezers) and from 600,000 to 1 million (air conditioners) by 2024.

The increased use of split systems and increased availability from discount and online retailers may lead to uncontrolled disposal and losses of refrigerant gases to the environment due to the reduced incentive to use licensed technicians in installation and removal of old appliances.

Material Composition

Disposal of RAC generates about 56,600 tonnes of ferrous waste and 14,000 tonnes of non-ferrous waste (current levels); and up to 33,000 tonnes of floc to landfill. Disposal also generates smaller quantities of other metals, which are contained in non-ferrous waste.

RAC equipment also contains a variety of plastics types including ABS, PVC, polystyrene and insulating polyurethane foams. The recycling rate of plastics in RAC equipment is small, due to the practice of RAC equipment being shredded with other materials, which leads to contamination and reduction in the grade of the non-metallic output (floc). There are no significant exports of shredded plastic waste or floc, as they have no saleable value. All shredder floc is currently disposed of to landfill. Shredding of polyurethane foam will release blowing agents into the atmosphere, including fluorinated compounds in older appliances.

Stockpiling of refrigerant gas and use of recovered refrigerant gas to fill appliances has occurred following the introduction of the carbon-pricing mechanism (CPM). This is due to the impact of the carbon price on refrigerants with high global warming potential, and is expected to disappear with the repeal of the CPM.

Other materials that need to be considered in the end-of-life treatment of RAC equipment include:

• 
  Trace metals such as mercury, lead and cadmium that are present in electronic components including printed circuit boards, switches and lighting
  
• 
  Brominated compounds used as flame-retardants
  
• 
  Polychlorinated biphenyls (PCBs) used in capacitors and transformers
  
• 
  Oil from compressors, and
  
• 
  Glass
  

Based on the current (2014) disposal rate of RAC refrigerators and freezers, and industry data for the composition of these appliances; the rate of entry of trace metals into the disposal chain is approximately 1 tonne (mercury), 100 tonnes (lead) and 8 tonnes(cadmium) per annum. No reliable data was able to be obtained for air conditioning equipment. Brominated flame retardants and PCBs are not present in modern appliances in any significant quantities.

Oil from compressors is largely not recovered in RAC equipment disposal in Australia.

Industry Dynamics and Opportunities

A very high proportion of the metal composition of RAC equipment in Australia is processed through shredding operations, and is ultimately recycled through local and overseas steelmaking, and overseas non-ferrous metal smelting. This is driven by the value obtained for scrap metal in local and overseas markets. There is minimum disassembly for “value adding” in Australia.

Increased value could be extracted from the RAC disposal chain by the use of dedicated recycling and shredding facilities to improve the opportunity to recover plastics of saleable value. Improvements to the recovery of refrigerant gas from the disposal chain could be made by:

• 
  Enforcement of current regulations (with LGAs and the service sector) and by the use of controlled collection to limit the opportunities for collection by scavengers (i.e. where the LGA is contacted to remove an item of RAC equipment at a particular time, rather than having it just left at the kerbside)
  
• 
  Encouraging the uptake of “take back” schemes by retailers and greater overall publicity of the need to recycle and recover RAC equipment
  

Controlled atmosphere shredding could be used to recover refrigerant gases and blowing agents, however this may not be cost effective.

The most comprehensive scheme of product stewardship of RAC equipment at end-of-life exists in the European Union (EU). The onus is on producers (and importers) of equipment to fund and provide facilities for collection, degassing, and disposal. Recyclers must achieve minimum recovery rates. The main benefits of this approach relative to Australian practice are that there is a higher rate of recovery of refrigerant gases and of plastics of saleable value.

The main disposal pathways for RAC equipment are represented in Figure and Figure that follows.

Figure : The most significant end-of-life disposal pathway for refrigerators, source: discussions with industry stakeholders and Appendix B

Figure : The most significant end-of-life disposal pathway for air conditioners, source: discussions with industry stakeholders and Appendix B

Glossary of terms

Term	Description
ABS	Acrylonitrile is a chemical compound used in the manufacture of plastics such as polyvinyl chloride. See ‘PVC’.
BSL	The Brotherhood of St Lawrence
CFC	Chlorofluorocarbons. See ‘ODS’
CPM	Carbon Pricing Mechanism. A legislative program introduced by the Australian Government in 2011 to impose a financial liability on large polluters of carbon dioxide
Disposal pathways	Describes different processes for disposing of whitegoods, each with different characteristics such as different tasks or actors
Domestic RAC	Refrigeration and air conditioning equipment used in a household or dwelling, as outlined at Section 1.2
E3	Equipment Energy Efficiency Program. A joint initiative of the Australian and New Zealand Governments to improve the energy efficiency of appliances and products to generate economic and environmental benefits
EERA	European Electronics Recycling Association
EPA	Environmental Protection Agency
EOL	End-of-Life. A term applied to whitegoods indicating that a product is at the end of its useful life
Ferrous metals	Any metal, including alloys, with appreciable iron content (e.g. steel)
GEMS	Greenhouse and Energy Minimum Standards. Legislation introduced by the Australian Government in 2012 to create a national framework for appliance and energy efficiency in Australia
GWP	Global Warming Potential. A multiplier indicating the potential of a chemical to contribute to the greenhouse effect, relative to the greenhouse effect of carbon dioxide
HCFC	Hydrochlorofluorocarbons. See ‘ODS’
HFC	Hydrofluorocarbons. See ‘SGG’.
HVAC	Heating, Ventilation and Air Conditioning. Refers to systems, often in a commercial or industrial context, that are installed in buildings for the purpose of controlling the thermal environment
Kerbside collection	Service provided, often by municipal or local authorities, to collect waste from households for the purpose of disposal. Also known as hard rubbish or verge collection
LGA	Local Government Authorities, commonly referred to as Councils
MEPS	Minimum Energy Performance Standard. Legislative requirements that specifies the minimum level of energy performance of whitegoods and other domestic appliances in Australia and New Zealand
MRF	Materials Recovery Facility. A specialised plant that receives, separates and prepares recyclable materials for marketing to end-use manufacturers
NARTA	The National Associated Retail Traders of Australia is an independent electrical buying group in Australasia
Non-ferrous metals	Any metal, including alloys, that do not contain appreciable amounts of iron
ODS	Ozone-Depleting Substances. Chemicals which, when emitted into the atmosphere, cause the depletion of the ozone layer. Includes chlorofluorocarbons (CFCs), and hydrochlorofluorocarbons (HCFCs)
Product stewardship	An approach to reducing the environmental and other impacts of products by encouraging or requiring manufacturers, importers, distributors and other persons in the product chain to take responsibility for those products
PCB	Polychlorinated biphenyl is a synthetic organic chemical compound made from chlorinated hydrocarbons that has been used in capacitors and transformers
PVC	Polyvinyl chloride is a commonly produced plastic, classified as a thermosetting resin
RAC	Refrigeration and Air Conditioning equipment, including freezers
RAD	Responsible Appliance Disposal (RAD) is a voluntary partnership program introduced by the US Environmental Protection Agency to recover metals, refrigerant gases and other materials from whitegoods
Refrigerant	A substance used in a refrigeration cycle which undergoes phase transitions from a liquid to a gas and back again in order to transfer heat
Refrigeration	Process in which work is done to move heat from one location to another. Where the term refers to equipment it includes both refrigerators and freezers
RRA	Refrigerant Reclaim Australia. The product stewardship organisation for the Australian refrigerant industry
SGG	Synthetic Greenhouse Gases. Man-made chemicals which contribute to the greenhouse effect. Includes hydrofluorocarbons (HFCs)
Shredder	A machine to reduce the size of materials by cutting them using an automated process
Shredder floc	Waste residue remaining after the shredding of vehicles, whitegoods or other appliances. Often largely comprised of plastics and rubber
VEET	Victorian Energy Efficiency Target, a Victorian Government scheme established in 2009 to reduce greenhouse gas emissions through the implementation of a market for energy efficiency
Whitegoods	Machines which accomplish a routine housekeeping task in a domestic context. Includes refrigerators, freezers and air conditioners as well as ovens, stovetops, toasters, washing machines, etc
WTS	Waste Transfer Station is a temporary consolidation point for collected waste

Term	Description
WEEE	Waste Electrical and Electronic Equipment (WEEE) Directive. A product stewardship scheme introduced in the European Union in 2002 to facilitate the management of waste from electrical and electronic goods sold in the EU
WEEE II	An updated version of WEEE introduced into the EU in 2012 (also known as the Recast WEEE Directive)

1. 
   Background